Suppose that in the fixed$-$income securities market, the current one$-$year and two$-$year spot interest rates are $1\mathrm{.}500\%$ and $4\mathrm{.}000\%,$ respectively. $($That is$,$ R $=1\mathrm{.}500\%$ and R $=4\mathrm{.}000\%).$

In addition, in the market, the current one$-$year forward rate one$-$year from now $($F $)$ is $6\mathrm{.}000\%.$

What should be an arbitrager$$s strategy at t $=0($now$)?$

$($Borrowing is equivalent to taking a loan; lending is equivalent to investing $/$ depositing.$)$

S$1)$ They will enter into a forward rate agreement, whereby, they will $($Lend or Borrow$)$ at one$-$year forward rate one$-$year from now.

S$2)$ They will $($lend or borrow$)$ at one$-$year spot rate.

S$3)$ They will $($lend or borrow$)$ at two$-$year spot rate.